Loading

Module 10: Tourism - Retail Travel Sales

Notes
Study Reminders
Support
Text Version

Set your study reminders

We will email you at these times to remind you to study.
  • Monday

    -

    7am

    +

    Tuesday

    -

    7am

    +

    Wednesday

    -

    7am

    +

    Thursday

    -

    7am

    +

    Friday

    -

    7am

    +

    Saturday

    -

    7am

    +

    Sunday

    -

    7am

    +

Tourism – Introduction to Retail Travel Sales
Introduction
Tour wholesalers are companies that purchase a variety of tourist services and sell them as a single product; a package holiday. Such services include accommodation, transportation, meals, sightseeing tours, etc. The companies buy these services in bulk in order to receive a reduced rate. For example, a wholesaler may contract a hotel for a hundred rooms for the months of June, July and August. Similar arrangements would be made with airlines, bus companies and attractions. By buying in bulk the wholesaler gets a better rate than regular travellers. The packages are then sold to tourists by travel agents, who charge a commission fee for each package sold.

The Appeal of Package Holidays
Package holidays appeal to people for practical and emotional reasons. The practical benefits are convenience, expertise and price. These vacations are convenient in that tourists can concentrate on the experience rather than making arrangements.

Purchasing a package holiday means tourists must give up a degree of personal control over their vacation in return for having someone plan and execute the trip for them. Tours offer the convenience of being picked up and delivered to hotels, attractions and entertainment. Accommodations, tickets to attractions and dinner reservations are guaranteed. This is particularly useful during high-season when demand for tourist services is very high.

The Appeal of Package Holidays
People who take package holidays also feel that they can see and do more than if they were organising their trip themselves. There is the feeling that the operator has the expertise to select the best places to see. Because of this, tourists can see more as they do not have to spend time evaluating all of the options.

The price is another appealing feature of package holidays. Because tour wholesalers have experience and buying power, the package is less expensive than if the components were purchased separately by the tourist. Furthermore, the fixed price makes it far easier for tourists to budget for their trip.

Economics of Package Holidays
For tour wholesalers the average return on sales is about 3%. This means that for a tour selling for $1,000 the net profit is approximately $30. Out of the revenue received from the tourist, the wholesaler must pay the suppliers and the travel agent who sold the package. This accounts for 85% to 90% of the revenue. With their gross profit, tour wholesalers must pay their operating costs.

Obviously, there is very little net profit left after all of these expenses. Since net profit is low, it is essential for tour wholesalers to sell a large volume of product.

Defining Package Holidays
There are four types of package holidays:
Independent
Hosted
Group Tours
Special Format

Independent Tours
Independent tours offer the most flexibility for the tourist. These packages include flights, accommodation and transport to and from the airport/point of arrival. Tourists can decide their departure and return dates themselves as well as the length of stay. Often, the accommodation includes optional activities and entertainment. These holidays are best suited to tourists that do not like to conform to a schedule.

Defining Package Holidays
Hosted Trips
A hosted trip is essentially the same as an independent holiday with the extra service of a host. A host is someone that makes arrangements within a destination on behalf of tourists. Such arrangements include organising guided tours, securing dinner reservations and organising transport to local attractions. The purpose of the host is to spare tourists the time and effort involved in organising tourist activities. Tourists can utilise the services of the host as much or as little as they please. Because of this, they can maintain their independence whilst enjoying the benefits of a package holiday.

Defining Package Holidays
Group Tours
A group tour or escorted tour is the most structured type of package holiday. On these trips tourists travel in groups and are accompanied by an escort/tour guide for most of the day.

Group tours have an extensive itinerary and tourists do not have much free time. Group tours allow tourists to explore many different regions and attractions within a country/destination in a short period of time. An example of an escorted trip would be a bus tour of Italy that visits a different region each day. Because of their contacts and expertise, travel companies can create an efficient and exciting itinerary. The role of the escort on these trips is to inform and guide tourists at each destination. These trips are best suited to people that enjoy the convenience of a pre-arranged trip schedule.


Defining Package Holidays
Special Format Tours
Special format tours are packages that are not catered to the general public. Most special-format tours are for corporate clients and/or niche groups.

For example, some tour wholesalers create incentive trips for companies. Incentive trips are trips that are used as a motivational tool in a workplace. Companies offer these vacations as a reward to their top performing employees. Other tour wholesalers create pre or post-convention tours for companies. Such tours add a vacation element to employees that are travelling to a corporate convention.

Niche tours are tours that are offered to people with a special interest. For example, some tour wholesalers create trips that are based around a sporting event.


Negative Images
Despite their many advantages some people have a negative image of package holidays.

Much of this perception comes from poor quality package holidays. Most package holidays are of a reputable quality. However, some tour wholesalers have offered vacations which are not up to the standard at which they were advertised. On such trips, the accommodation will be poor and the services provided will be of a very low standard. The vast majority of these trips are sold directly to customers by tour operators and not sold through travel agents. Nonetheless, the media attention garnered by these vacations means some people view package holidays with suspicion.

Negative Images
Group tours also have some negative associations attached to them. To many, touring is equated with regimentation, inflexibility and passivity. The tour is seen as a shallow, boring, and impersonal experience. Some people also assume that being part of a group means being taken for granted by hotels and restaurants. Others do not like the idea of spending a significant amount of time travelling in a bus.

Some people are unattracted to the group aspect of the tour. There is a fear of not relating well to other members of the group. Many people enjoy having personal space and freedom on their holidays and fear that being part of a group will limit both.

Negative Images
To overcome these negatives associations, tour wholesalers need to be innovative in upgrading both the image and the content of tours. Tour wholesalers must ensure that those marketing their packages are aware of their quality and highlight it in their promotional campaign.

Furthermore, wholesalers should try and be innovative in the names they give their packages. Trips focused on visiting attractions should be given names such as “discovery trips”, or "excursions”. Trips that focus heavily on recreational activities or hobbies should be called “adventure holidays”.

END OF UNIT:
Tour Wholesalers